Wells Fargo to compensate clients for unwanted car insurance

The insurance protected against loss or damage to a vehicle used as collateral to secure a loan. For about 20,000 customers, the extra costs may have contributed to defaults that led to the repossession of their automobiles. (AP Photo/CX Matiash, File) Wells Fargo & Co. plans to compensate as many as 570,000 borrowers who were unwittingly sold car insurance, the latest issue to taint the U.S. bank. The San Francisco-based lender will pay as much as $80 million to customers who may have been “financially harmed” after purchasing collateral protection insurance tied to automobile loans, it said in a statement late Thursday. Inadequate controls In a review of the program, which was scrapped in September, Wells Fargo found that “certain external vendor processes and internal controls were inadequate.” As a result, customers may have been charged premiums even if they were paying for their own vehicle insurance, and some may have had their vehicles repossessed, the bank said. Related: Drivers with no credit can pay up to 113% more on auto insurance The issue follows last year’s revelations that Wells Fargo employees had been opening potentially millions of accounts in its retail banking division without customers’ permission. The bank fired more than 5,000 employees over five years, refunded customers and agreed to pay fines totaling $185 million. “We take full responsibility for our failure to appropriately manage the CPI program and are extremely sorry for any harm this caused our customers, who expect and deserve better from us,” Franklin Codel, head of consumer lending, said in the statement. Cars repossessed Wells Fargo reviewed policies placed from 2012 to 2017. It will start sending letters and refund checks to customers next month, and expects the process will be complete by the end of the year, according to the statement. The insurance protected against loss or damage to a vehicle used as collateral to secure a loan. For about 20,000 customers, the extra costs may have contributed to defaults that led to the repossession of their automobiles, the bank said. Those borrowers will receive additional payments to compensate for that loss. Wells Fargo will also work with credit bureaus to amend customers’ credit records, it said. Last year’s fake-account scandal led to lawsuits, congressional hearings and John Stumpf’s resignation as chief executive officer.

About John Fagan

John is a Jacksonville native who grew up on the First Coast. He graduated from Bishop Kenny High School in 1975 and went to college at Florida State University where he completed a 4-year program in 3 years. John graduated from the Florida State University College of Business in 1978 and went straight into Florida State University College of Law. While in law school, John earned a position on the prestigious Law Review Board serving as its Business Editor. As a law student, John studied in the Oxford program. He also interned with the Florida Legislature working in the Florida House of Representatives Criminal Justice Committee. John was admitted to the Florida Bar in 1981. John began his legal career as a law school intern in the State Attorney's Office in Jacksonville in 1981. After his internship, legendary State Attorney Ed Austin hired John as a full-time Assistant State Attorney for the Fourth Judicial Circuit (Clay, Duval, and Nassau Counties). As a prosecutor, John tried jury and non-jury trial on charges ranging from DUI to Murder. In 1983, John moved from the State Attorney's Office to begin his career in private practice. He has practiced law for 30 years on the First Coast. For the last 20 years, John and his family have made Clay County their home. John limits his practice to personal injury and disability cases. While there are many fine attorneys in Clay County, John is one of only a few Clay County attorneys who limit their practice to personal injury and disability cases. John takes pride in helping clients resolve injury claims in ways that avoid the stress, uncertainty, and the expense of unnecessary litigation. Professional Activities John is the past President of the Clay County Bar Association and has served on the Board of the Clay County Bar Association from 2009-2013. He is an active member of the Florida Bar, and the Federal Bar of the Middle and Southern Districts of Florida. He is also a member of the American Association of Justice, the Florida Association of Justice, the National Organization of Social Security Claimants' Representatives, and the National Organization of Veterans' Advocates. Service to the Community John is involved in the Clay County Community serving as a member and Director of the Rotary Club of Orange Park, of the Clay County Bar Association, and the Putnam County Bar Association.
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